Beer giant to locate in Chicago

MillerCoors to get $20 million in aid for 300-400 jobs at new headquarters

In the sweepstakes for landing corporate headquarters, Chicago won one Tuesday when a joint venture of two of the biggest U.S. beer operations announced it will call the city home.

Landing MillerCoors will add 300 to 400 jobs, a tiny number for an economy the size of Chicago's, economic development experts say. Still, it's a symbolic victory for a city that values its identity as a business crossroads yet has witnessed an exodus of famous names over the past decade through corporate restructurings, among them Amoco, Ameritech and First Chicago. Chicago's also won some contests, wooing such companies as Boeing from Seattle and United Airlines from the suburbs.

FOR THE RECORD - This story contains corrected material, published July 17, 2008.

But landing MillerCoors comes at a price of over $20 million in state and city subsidies, raising an oft-asked question in economic development circles: Would it have come here anyway, even without an aid package?

After all, Chicago is hardly a Rust Belt relic. It's what economic development experts would call a "winner" city, a place with a healthy, diversified economy and cultural and recreational amenities to attract highly skilled workers.

In fact, despite all the worries over lost corporate headquarters, the number of high-paying corporate management jobs -- the kind MillerCoors will create -- has grown at a heady pace in recent years, according to federal employment data.

MillerCoors is a joint venture unveiled last year between SABMiller and Molson Coors, aimed at creating a stronger challenger to Anheuser-Busch, the U.S. beer industry titan that now plans to merge with Europe's InBev.

With Molson Coors' U.S. operations based in Denver and Miller's headquartered in Milwaukee, the new company decided to locate in a neutral site.

Victory over Dallas

MillerCoors narrowed the choice to Chicago and suburban Dallas.

The company chose Chicago because it will have "access to an attractive base of talent, transportation and business resources," MillerCoors President Tom Long said in a statement, adding the company was "grateful" for Illinois' "support."

Julian Green, a MillerCoors spokesman, added Chicago was also "very attractive because it has long been a hub of marketing and advertising." DraftFCB in Chicago is Coors' lead ad agency. Starcom here is Miller's media buyer, while Y&R's Chicago office handles the Miller Genuine Draft account.

The joint venture will move 150 to 175 jobs to Chicago from each of its two headquarters cities, MillerCoors said. The move is expected to take place beginning in June 2009, and the venture is looking at several locations, including Chicago Apparel Center in River North, the former Carson Pirie Scott store and 250 S. Wacker Drive (this address as published has been corrected in this text).

"Political leaders view [a major corporate relocation] as a vote of confidence in their administration," said David Merriman, a professor at the Institute of Government and Public Affairs at the University of Illinois (this sentence as published has been corrected in this text). "You can think of it as 'this company just bought stock in Illinois.'"

Laurence Msall, president of the Civic Federation, a non-partisan government watchdog group in Chicago, called the win "cause for good cheer."

Merriman agreed winning MillerCoors is a symbolic victory. "The question is whether the tax breaks are justified. The tax breaks are not symbolic."

The city has offered assistance to MillerCoors in the form of tax-increment financing. The exact amount hasn't been determined, but Rita Athas, executive director of World Business Chicago, the city's economic development office, said it would likely be $2.5 million to $5 million.

The city has given similar TIF subsidies to other corporate relocations. But such incentive packages have been criticized because TIFs were set up to fix blighted areas.

Illinois has lined up an $18 million assistance package, primarily involving income tax rebates.

The state justified its incentives, saying such deals create economic development, and Green said the city and state package "definitely made an impact."

Marginal reason

Yet Merriman said research shows tax breaks are a relatively marginal reason for a relocation choice, compared with factors such as the quality of a region's labor pool and the amenities a city offers.

Indeed, as far as amenities go, development expert Timothy Bartik of the W.E. Upjohn Institute, said "Chicago is one of the cities perceived as winners."

Perhaps that helps explain that despite some lost headquarters, the number of "management of companies" jobs, as tracked by the U.S. Bureau of Labor Statistics, has grown a strong pace in recent years. Between 2001 and 2006, they grew 7 percent in Cook County, 33 percent in DuPage County and 83 percent in Lake County, according to BLS statistics.